Natus Medical Announces Third Quarter Financial Results

October 24, Natus Medical Announces Third Quarter Financial Results Reports record third quarter revenue of $130.6 million Reports third quarter GAAP loss per share of $0.17 and non-gaap earnings per share of $0.40 Updates annual revenue and earnings guidance for PLEASANTON, Calif., Oct. 24, (GLOBE NEWSWIRE) -- Natus Medical Incorporated (NASDAQ: BABY) today announced financial results for the three and nine months ended. For the third quarter ended, the Company reported revenue of $130.6 million, an increase of 6.5% compared to $122.6 million reported for the third quarter. GAAP gross profit margin was 59.0% vs. 60.5% in the third quarter. GAAP net loss was $5.6 million, or $0.17 per share, compared with GAAP net loss of $8.5 million, or $0.26 per share in the third quarter. Non-GAAP earnings per diluted share was $0.40 for the third quarter, compared to $0.40 in the third quarter. Non-GAAP net income was $13.4 million for the third quarter compared to the prior year's third quarter non-gaap net income of $13.1 million. Non-GAAP gross profit margin was 60.6% vs. 61.1% reported for the third quarter of. For the nine months ended, the Company reported revenue of $389.9 million, an increase of 5.5% compared to $369.5 million reported for the same period in. GAAP gross profit margin was 57.4% vs. 56.1% reported for the same period in. GAAP net loss was $11.3 million, or $0.34 per share, compared with GAAP net loss of $13.2 million, or $0.41 per share in the same period in. Non-GAAP earnings per diluted share was $0.99 for the nine months ended, compared to $1.03 in the same period in. The Company reported non-gaap net income of $33.0 million for the nine months ended, compared to the prior year's non-gaap net income of $34.2 million. Cash flow from operations was $7.6 million and the Company repaid $5.0 million of outstanding debt during the third quarter of. Our third quarter results are highlighted by 6.5% year over year revenue growth and 12.1% growth in non-gaap operating income driven both by the acquisition of our Neuro Surgery business last year and modest organic growth in Neuro, said Jonathan Kennedy, President and Chief Executive Officer of Natus. We also continued to make progress on the regulatory front, successfully completing an FDA audit and our first MDSAP audit in

our Seattle facility during the quarter. In the third quarter, we made excellent progress with several new products. We recognized our first revenue on Otoscan, selling over 50 units, introduced four new neurodiagnostic devices and Newborn Care made significant headway on new systems expected to be released in 2019, Kennedy continued. Financial Guidance For the fourth quarter of, the Company provided revenue guidance of $135.0 million to $140.0 million and non-gaap earnings per share guidance of $0.48 to $0.51. For the full year, the Company updated its revenue guidance to $525.0 million to $530.0 million from $525.0 million to $535.0 million and updated its non-gaap earnings per share guidance to $1.47 to $1.50 from $1.50 to $1.60. The Company's non-gaap earnings per share guidance excludes charges for amortization expense associated with intangible assets from prior acquisitions, certain other expenses, and related tax effects, which the Company expects to be approximately $7.5 million and $52.0 million for the fourth quarter and full year, respectively, and which the Company expects will reduce GAAP earnings per share by approximately $0.22 and $1.54 for the respective periods. Use of Non-GAAP Financial Measures The Company presents in this release its non-gaap net income, non-gaap earnings per share, non-gaap gross margin and non-gaap operating margin results which exclude amortization expense associated with certain acquisition-related intangibles, restructuring charges, certain discrete items, direct costs of acquisitions, and the related tax effects. A reconciliation between non-gaap and GAAP financial measures is included in this press release. The Company believes that the presentation of results excluding these charges or gains provides meaningful supplemental information to both management and investors that is indicative of the Company's core operating results and better reflects the ongoing economics of the Company's operations. The Company believes these non-gaap financial measures facilitate comparison of operating results across reporting periods. Specifically, the Company excludes the following charges, gains, and their related tax effects in the calculation of non-gaap net income, non-gaap earnings per share and non-gaap operating expense: 1) Non-cash amortization expense associated with certain acquisition-related intangibles. The charges reflect an estimate of the cost of acquired intangible assets over their estimated useful lives. 2) Restructuring and other nonrecurring charges. The Company has over time completed multiple acquisitions of other companies and businesses. Following an acquisition the Company will, as it determines appropriate, initiate restructuring events to eliminate redundant costs. Restructuring expenses, which are excluded in the non-gaap items, are exclusively related to permanent reductions in our workforce and redundant facility closures. Other non-recurring costs are associated with the transition of the executive management team. These costs

can include stock compensation from accelerated vesting of stock, severance payouts and related payroll expenses. 3) Certain discrete items. These items represent significant infrequent charges or gains that management believes should be viewed outside of normal operating results, and each significant discrete transaction is evaluated to determine whether it should be excluded from non-gaap reporting. These items are specifically identified when they occur. 4) Direct costs of acquisitions. These are direct acquisition-related costs that occur when the Company makes an acquisition, such as professional fees, due diligence costs, and earn-out adjustments. The Company applies GAAP methodologies in computing its non-gaap tax provision by determining the annual expected effective tax rate after taking into account items excluded for non-gaap financial reporting purposes. The Company s non-gaap tax expense and its non-gaap effective tax rate are generally higher than its GAAP tax expense and GAAP effective tax rate because the income subject to taxes would be higher due to the effect of the expenses excluded from non-gaap financial reporting. The nature of each quarterly discrete transaction will be evaluated to determine whether it should be excluded from non-gaap reporting. The Company's management uses these non-gaap financial measures in assessing the Company's performance and when planning, forecasting, and analyzing future periods and the Company believes that investors also benefit from being able to refer to these non- GAAP financial measures along with the GAAP operating results. These non-gaap financial measures also facilitate management's internal comparisons to the Company's historical performance. The non-gaap financial measures disclosed by the Company should not be considered a substitute for or superior to financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. Conference Call Natus has scheduled an investment-community conference call to discuss this announcement beginning at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time) today, October 24,. Individuals interested in listening to the conference call may do so by dialing 1-844-634-1441 for domestic callers, or 1-508-637-5658 for international callers, and entering reservation code 6688356. A telephone replay will be available for 48 hours following the conclusion of the call by dialing 1-855-859-2056 for domestic callers, or 1-404-537-3406 for international callers, and entering reservation code 6688356. The conference call also will be available real-time via the Internet at https://edge.mediaserver.com/m6/p/nsr5n74b, and a recording of the call will be available on the Company s Web site for 90 days following the completion of the call. About Natus Medical Incorporated Natus is a leading provider of healthcare products and services used for the screening, detection, treatment, monitoring and tracking of common medical ailments in newborn care, hearing impairment, neurological dysfunction, neurosurgery, epilepsy, sleep disorders, and balance and mobility disorders. Additional information about Natus Medical can be found at www.natus.com.

Forward-Looking Statements This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, particularly statements regarding the expectations, beliefs, plans, intentions and strategies of Natus. These forward-looking statements include statements regarding the anticipated revenue and GAAP and non- GAAP earnings per share for the fourth quarter and full year and the impact of amortization expense associated with acquisition-related intangible assets, certain other expenses, and related tax effects. These statements relate to current estimates and assumptions of our management as of the date of this press release and involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance, or achievements to differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements are only predictions and the actual events or results may differ materially. Natus cannot provide any assurance that its future results or the results implied by the forward-looking statements will meet expectations. Our future results could differ materially due to a number of factors, including the effects of competition, our ability to successfully integrate and achieve our profitability goals from recent acquisitions, the demand for our products and services, the impact of adverse global economic conditions and changing governmental regulations, including foreign exchange rate changes, on our target markets, our ability to expand our sales in international markets, our ability to maintain current sales levels in a mature domestic market, our ability to control costs, risks associated with bringing new products to market, and our ability to fulfill product orders on a timely basis. Natus disclaims any obligation to update information contained in any forward looking statement. More information about potential risk factors that could affect the business and financial results of Natus is included in Natus' annual report on Form 10-K for the year ended December 31,, and its subsequent quarterly reports on Form 10-Q and in other reports filed from time to time by Natus with the U.S. Securities and Exchange Commission. Natus Medical Incorporated Drew Davies Executive Vice President and Chief Financial Officer (925) 223-6700 InvestorRelations@Natus.com CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) (in thousands, except per share amounts) Three Months Ended Nine Months Ended Revenue $ 1638 $ 122,643 $ 389,900 $ 369,531 Cost of revenue 51,583 47,112 159,849 158,615

Intangibles amortization 1,930 1,290 6,235 3,789 Gross profit 77,125 74,241 223,816 207,127 Gross profit margin 59.0 % 60.5 % 57.4 % 56.1 % Operating expenses: Marketing and selling 33,200 32,537 102,474 95,106 Research and development 15,127 11,632 46,186 38,098 General and administrative 15,799 17,329 56,967 57,501 Intangibles amortization 4,477 3,882 13,434 11,841 Restructuring 11,432 321 14,182 914 Total operating expenses 80,035 65,701 233,243 203,460 Income (loss) from operations (2,910 ) 8,540 (9,427 ) 3,667 Interest expense (1,644 ) (1,025 ) (5,240 ) (3,287 ) Other income 918 1,175 296 2,019 Income (loss) before tax (3,636 ) 8,690 (14,371 ) 2,399 Provision for income tax expense (benefit) 1,940 17,203 (3,069 ) 15,597 Net loss $ (5,576 ) $ (8,513 ) $ (11,302 ) $ (13,198 ) Loss per share: Basic $ (0.17 ) $ (0.26 ) $ (0.34 ) $ (0.41 ) Diluted $ (0.17 ) $ (0.26 ) $ (0.34 ) $ (0.41 ) Weighted-average shares: Basic 33,321 32,593 32,982 32,536 Diluted 33,321 32,593 32,982 32,536 CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands) ASSETS June December 31, Current assets: Cash and investments $ 54,440 $ 54,908 $ 88,950 Accounts receivable 121,113 122,971 126,809 Inventories 80,586 76,630 71,529 Other current assets 843 32,224 18,340 Total current assets 286,982 286,733 305,628 Property and equipment 21,564 21,645 22,071 Goodwill and intangible assets 318,618 326,109 345,580 Deferred income tax 10,135 10,296 10,709

Other assets 16,746 18,855 25,931 Total assets $ 654,045 $ 663,638 $ 709,919 LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Accounts payable $ 20,595 $ 24,053 $ 25,242 Accrued liabilities 52,015 54,874 51,738 Deferred revenue 16,816 16,892 15,157 Total current liabilities 89,426 95,819 92,137 Long-term liabilities: Long-term debt 114,426 119,379 154,283 Deferred income tax 18,896 18,936 19,407 Other long-term liabilities 21,338 21,970 21,995 Total liabilities 244,086 256,104 287,822 Total stockholders equity 409,959 407,534 422,097 Total liabilities and stockholders equity $ 654,045 $ 663,638 $ 709,919 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) Three Months Ended Operating activities: Net loss $ (5,576 ) $ (8,513 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Provision for losses on accounts receivable 1,782 1,632 Depreciation and amortization 8,958 7,040 Loss on disposal of property and equipment 250 20 Warranty reserve (902 ) (401 ) Share-based compensation 9,814 2,248 Changes in operating assets and liabilities: Accounts receivable 891 (4,762 ) Inventories (2,700 ) 699 Prepaid expenses and other assets 743 719 Accounts payable (3,435 ) (8,734 ) Accrued liabilities (2,446 ) 1,967 Deferred revenue 58 998 Deferred income tax 191 11,021

Net cash provided by operating activities 7,628 3,934 Investing activities: Acquisition of businesses, net of cash acquired 4,844 Purchases of property and equipment (1,740 ) (1,285 ) Purchase of intangible assets (339 ) Net cash provided by (used in) investing activities (2,079 ) 3,559 Financing activities: Proceeds from stock option exercises and Employee Stock Purchase Program purchases 5,423 174 Taxes paid related to net share settlement of equity awards (4,847 ) (549 ) Deferred debt issuance costs (316 ) Contingent consideration earn-out (446 ) Proceeds from borrowings 50,000 Payments on borrowings (5,000 ) (5,000 ) Net cash provided by (used in) financing activities (4,424 ) 43,863 Exchange rate changes effect on cash and cash equivalents (1,593 ) 746 Net Increase (decrease) in cash and cash equivalents (468 ) 52,102 Cash and cash equivalents, beginning of period 54,908 80,303 Cash and cash equivalents, end of period $ 54,440 $ 132,405 RECONCILIATION OF NON-GAAP ADJUSTMENTS (unaudited) (in thousands, except per share amounts) Three Months Ended Nine Months Ended GAAP based results: Income before provision for income tax $ (3,636 ) $ 8,690 $ (14,371 ) $ 2,399 Non-GAAP adjustments: Intangibles amortization - (COGS) 1,930 1,290 6,235 3,789 Recall accrual and remediation efforts (COGS) (1,198 ) (714 ) 1,375 3,945 Restructuring and other non-recurring costs (COGS) 846 873 1,684 Direct costs of acquisitions (COGS) 402 76 3,882 4,446 Intangibles

amortization - (OPEX) 4,483 3,882 13,439 11,841 Direct costs of acquisitions (M&S) 14 (302 ) 423 (338 ) Recall accrual and remediation efforts (R&D) 1,288 1,469 4,875 6,571 Direct costs of acquisitions (R&D) 50 24 235 24 Restructuring and other non-recurring costs (OPEX) 12,904 321 18,108 5,401 Direct costs of acquisitions (G&A) 502 1,457 3,682 2,370 Restructuring and other non-recurring costs (OI) 366 Direct costs of acquisitions (OI) 48 Extraordinary annual meeting expenses 15 2,230 Extraordinary patent litigation 306 996 1,642 Non-GAAP income before provision for income tax 17,600 16,499 42,348 43,822 Income tax expense, as adjusted $ 4,227 $ 3,380 $ 9,357 $ 9,672 Non-GAAP net income $ 13,373 $ 13,119 $ 32,991 $ 34,150 Non-GAAP earnings per share: Basic $ 0.40 $ 0.40 $ 1.00 $ 1.05 Diluted $ 0.40 $ 0.40 $ 0.99 $ 1.03 Weighted-average shares used to compute Basic non-gaap earnings per share 33,321 32,593 32,982 32,536 Diluted non-gaap earnings per share 33,551 33,100 33,388 33,086 RECONCILIATION OF NON-GAAP ADJUSTMENTS (unaudited) (in thousands, except per share amounts)

Three Months Ended Nine Months Ended GAAP Gross Profit 77,125 74,241 223,816 207,127 Amortization of intangibles 1,930 1,290 6,235 3,789 Direct cost of acquisitions 402 76 3,882 4,446 Recall accrual and remediation efforts (1,198 ) (714 ) 1,375 3,945 Restructuring and other nonrecurring costs 846 873 1,684 Non-GAAP Gross Profit 79,105 74,893 236,181 220,991 Non-GAAP Gross Margin 60.6 % 61.1 % 60.6 % 59.8 % GAAP Operating Profit (2,910 ) 8,540 (9,427 ) 3,667 Amortization of intangibles 6,413 5,172 19,674 15,630 Recall accrual and remediation efforts 90 755 6,250 10,516 Extraordinary patent litigation 306 996 1,642 Restructuring and other nonrecurring costs 13,750 321 18,981 7,085 Direct cost of acquisitions 968 1,255 8,222 6,502 Extraordinary annual meeting expenses 15 2,230 Non-GAAP Operating Profit 18,326 16,349 46,926 45,042 Non-GAAP Operating Margin 14.0 % 13.3 % 12.0 % 12.2 % GAAP Provision for income tax expense (benefit) 1,940 17,203 (3,069 ) 15,597 Effect of accumulated change of pretax income (15,493 ) (1,942 ) (4,701 ) 5,099 Effect of change in annual expected tax rate 15,704 (1,126 ) 14,120 (473 ) Repatriation tax adjustment 101 Stock-based compensation adjustment 791 1,621 Valuation Allowance for GAAP purposes 1,285 (10,755 ) 1,285 (10,755 ) Effect on acquisition cost 204 Non-GAAP Income tax expense 4,227 3,380 9,357 9,672 Quarter Ended Year Ended December 31, December 31, $0.26 - ($0.07) -

GAAP EPS Guidance $0.29 ($0.04) Amortization of Intangibles 0.20 0.79 Restructuring and other nonrecurring costs 0.03 0.67 Litigation 0.03 Recall Accrual and Remediation Efforts 0.03 0.22 Direct cost of acquisitions 0.02 0.26 Tax effect (0.06) (0.43) Non-GAAP EPS Guidance $0.48 - $0.51 $1.47 - $1.50 GROSS MARGIN BY BUSINESS UNIT (unaudited) (in thousands) Three Months Ended Nine Months Ended Neuro: Revenue $ 69,790 $ 59,368 $ 206,162 $ 174,955 Cost of revenue 25,275 21,222 79,628 65,011 Intangibles amortization 1,042 470 3,507 1,369 Gross profit 43,473 37,676 123,027 108,575 Gross profit margin 62.3 % 63.5 % 59.7 % 62.1 % Newborn care: Revenue $ 31,210 $ 33,666 $ 91,188 $ 108,408 Cost of revenue 13,044 12,848 38,223 52,248 Intangibles amortization 119 126 358 338 Gross profit 18,047 20,692 52,607 55,822 Gross profit margin 57.8 % 61.5 % 57.7 % 51.5 % Otometrics: Revenue $ 29,638 $ 29,609 $ 92,550 $ 86,168 Cost of revenue 13,264 13,042 41,998 41,356 Intangibles amortization 769 694 2,370 2,082 Gross profit 15,605 15,873 48,182 42,730 Gross profit margin 52.7 % 53.6 % 52.1 % 49.6 % Consolidated: Revenue $ 1638 $ 122,643 $ 389,900 $ 369,531 Cost of revenue 51,583 47,112 159,849 158,615

Intangibles amortization 1,930 1,290 6,235 3,789 Gross profit 77,125 74,241 223,816 207,127 Gross profit margin 59.0 % 60.5 % 57.4 % 56.1 % RECONCILIATION OF NON-GAAP GROSS MARGIN BY BUSINESS UNIT (unaudited) (in thousands) Three Months Ended Nine Months Ended Neuro: GAAP Gross Profit 43,473 37,676 123,027 108,575 Amortization of intangibles 1,042 469 3,507 1,364 Acquisition charges 402 3,832 Recall accrual and remediation efforts 1,781 Non-GAAP Gross Profit 44,917 38,145 1366 111,720 Non-GAAP Gross Margin 64.4 % 64.3 % 63.2 % 63.9 % Newborn care: GAAP Gross Profit 18,047 20,692 52,607 55,822 Amortization of intangibles 119 128 358 345 Recall accrual and remediation efforts (1,198 ) (714 ) 1,375 2,164 Restructuring and other nonrecurring costs 846 848 1,684 Non-GAAP Gross Profit 17,814 20,106 55,188 60,015 Non-GAAP Gross Margin 57.1 % 59.7 % 60.5 % 55.4 % Otometrics: GAAP Gross Profit 15,605 15,873 48,182 42,730 Amortization of intangibles 769 693 2,370 2,080 Acquisition charges 76 50 4,446 Restructuring and other nonrecurring costs 25 Non-GAAP Gross Profit 16,374 16,642 50,627 49,256 Non-GAAP Gross Margin 55.2 % 56.2 % 54.7 % 57.2 % Consolidated: GAAP Gross Profit 77,125 74,241 223,816 207,127 Amortization of intangibles 1,930 1,290 6,235 3,789 Acquisition charges 402 76 3,882 4,446 Recall accrual and remediation

efforts (1,198 ) (714 ) 1,375 3,945 Restructuring and other nonrecurring costs 846 873 1,684 Non-GAAP Gross Profit 79,105 74,893 236,181 220,991 Non-GAAP Gross Margin 60.6 % 61.1 % 60.6 % 59.8 % GEOGRAPHIC REVENUE (unaudited) (in thousands) Three Months Ended Nine Months Ended Consolidated Revenue: United States 77,980 68,697 222,135 200,506 International 52,658 53,946 167,765 169,025 Totals 1638 122,643 389,900 369,531 United States 60 % 56 % 57 % 54 % International 40 % 44 % 43 % 46 % Totals 100 % 100 % 100 % 100 % Source: Natus Medical Incorporated